01—Abstract
Summary
Summary of the 10-K filed August 28, 2015. Cited figures are marked; the original filing is the authoritative source.
COHERENT CORP. (COHR) reported a significant increase in net earnings for the fiscal year ended June 30, 2015, reaching $66.0 milliona, a substantial rise from $38.4 million in the prior year.
This improvement was driven by strong revenue growth of 9% to $742.0 millionb, fueled by recent acquisitions and increased demand in key markets like optical communications and automotive manufacturing. The company successfully realized synergies from prior acquisitions, leading to a notable 340 basis point improvement in gross margin to 36.6%. The company has strategically realigned into three core segments: II-VI Laser Solutions, II-VI Photonics, and II-VI Performance Products.
Despite a challenging defense spending environment impacting the Performance Products segment, the Laser Solutions and Photonics segments showed robust growth. COHR's financial health remains solid, with ample operating cash flow and borrowing capacity to support ongoing operations and future growth initiatives, including strategic acquisitions and research and development.
02—Key points
Key Highlights
- Net earnings increased by 72% to $66.0 million in FY2015, with diluted EPS rising to $1.05 from $0.60 in FY2014.
- Total revenues grew by 9% to $742.0 million in FY2015, driven by strong performance in Laser Solutions and Photonics segments.
- Gross margin improved significantly to 36.6% from 33.2% in the prior year, reflecting successful synergy realization and operational efficiencies.
- Bookings increased by 10% to $761.7 million, indicating strong future revenue potential.
- The company has realigned its operations into three key reporting segments: Laser Solutions, Photonics, and Performance Products, to enhance operational focus and financial transparency.
- Research and development investment increased to 6.9% of revenues, underscoring a commitment to innovation and new product development.
- The company maintained compliance with its credit facility covenants and had $116.6 million in available borrowing capacity as of June 30, 2015.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Coherent Corp. kept $0.09.
- Revenue$742.0M100.0%
- Cost of revenue−$470.4M63.4%
- Gross profit$271.6M36.6%
- Operating costs−$194.8M26.3%
- Operating income$76.8M10.4%
- Interest, other & tax−$10.8M1.5%
- Net income$66.0M8.9%
Where FY2015 revenue went
$742.0M- Cost of revenue: $470.4M, 63% of revenue
- SG&A: $143.5M, 19% of revenue
- Net income: $66.0M, 8.9% of revenue
- R&D: $51.3M, 6.9% of revenue
- Interest, other & tax: $10.8M, 1.5% of revenue
Kept 8.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed August 28, 2015Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $741.96M$683.26M | +8.6% |
| Cost of Revenue | $470.36M$456.55M | +3.0% |
| Gross Profit | $271.60M$226.72M | +19.8% |
| R&D Expenses | $51.26M$42.52M | +20.5% |
| SG&A Expenses | $143.54M$137.71M | +4.2% |
| Operating Income | $76.80M$46.49M | +65.2% |
| Interest Expense | $3.86M$4.48M | −13.8% |
| Net Income | $65.97M$38.45M | +71.6% |
| EPS (Basic) | $1.08$0.62 | +74.2% |
| EPS (Diluted) | $1.05$0.60 | +75.0% |
| Shares Outstanding (Basic) | 61.22M62.25M | −1.7% |
| Shares Outstanding (Diluted) | 62.59M63.69M | −1.7% |
05—Questions
Frequently Asked Questions
What were the main drivers for the improved financial performance in fiscal year 2015?
The improved financial performance was primarily driven by a 9% increase in revenues to $742.0 million, supported by the full-year impact of recent acquisitions and growing demand in markets such as optical communications and automotive manufacturing. Significant improvements in gross margin to 36.6% were achieved due to synergy realization from acquisitions and operational efficiencies.
How has the company's organizational structure changed?
Effective July 1, 2014, the company realigned its operations into three reportable segments: II-VI Laser Solutions, II-VI Photonics, and II-VI Performance Products. This restructuring aims to enhance focus on end markets and customers, improve operational alignment, and provide better visibility into profitability and cash usage.
What is the company's outlook on future growth and R&D investment?
The company is focused on penetrating new markets through innovative technologies and product introductions. Research and development investment remained strong, targeting between 7-9% of revenues, indicating a commitment to developing new products and improving existing processes to meet evolving customer requirements. They also look for strategic acquisitions to accelerate growth.
What are the key risks identified by the company for its future operations?
Key risks identified include dependence on international sales and global operations, the need to continually develop new products and processes to keep pace with industry developments, potential adverse impacts from global economic conditions, reliance on intellectual property protection, and significant competition. Additionally, the cyclical nature of some of its end markets and potential cuts in defense spending pose risks.
06—Continue